13 Provisions and Contingencies

13: 13: PROVISIONS AND CONTINGENCIES

Chapter Summary 

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Recognise in financial statements: Dr Expense (I/S) Cr Provision SOFP

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Entity has a present obligation as a result of a past event It is probable that an outflow of economic resources will be required to settle the obligation A reliable estimate can be made of the amount

Accounting treatment

Recognition criteria

Provisions 'A liability of uncertain timing or amount'

Provisions and contingencies

Contingent liabilities

Contingent assets

'An uncertain liability that does not meet the three criteria for recognising a provision' Possible obligation Present obligation - which is not probable - where the amount cannot be measured reliably Disclose in a note to the financial statements

'A possible asset that arises from past events and whose existence will be confirmed by one or  more uncertain future events not wholly within the control of the entity'. Disclose where probable Recognise if virtually if virtually certain

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